Thursday, 31 March 2016

Britain bases its jobless data on a widely used formula that
defines an adult as unemployed if they are out of work and have actively sought
a new post over the past month. However, the TUC (the umbrella body for UK
trade unions) said incorporating six measures of joblessness that are common in
the US would paint the UK job market in a much bleaker light. Those include unemployed
people who want work but have not actively sought it for six weeks, who number
more than 2.2 million in the UK, and "underemployed" adults who are
in part-time work because they cannot find full-time work, who add a further
1.3 million to the unemployment total. Brendan Barber, the TUC general
secretary, said: "Our jobs crisis is not confined to those out of work.
Nearly two million people are being forced to take low-paid, insecure, short
hours jobs because of the lack of proper full-time employment. This means
people are taking home much less pay, which is putting a real strain on family
budgets. When ministers say there are plenty of jobs out there, they are
ignoring the sheer numbers of people looking for work, as well as the
suitability and location of the jobs available." During the 1980s the
Thatcher government was accused of adopting youth training schemes to keep the
total from soaring towards 4 million. Later, the Major government and its
Labour successors allowed many long-term unemployed to switch to disability
benefits. According to the TUC analysis, the UK has experienced a significant
rise in the underemployment phenomenon over the past two decades, with the
total standing at 1.3 million compared with 802,000 in 1993. All countries have
faced similar criticism. The US has kept its unemployment rate from straying
much above the all important 10% level by excluding the long-term unemployed,
while Germany's extensive youth training and apprenticeship schemes have come
under increasing criticism for providing low levels of support to young people
with poor school qualifications. GUARDIAN

Most UK manufacturers
are struggling to recruit skilled workers

Three-quarters of companies say they have faced difficulties
finding the right workers in the last three years, according to business group
EEF. It warns a skills shortage is putting productivity growth at risk and
adding to pressure on manufacturers as they battle a host of pressures in
domestic and overseas markets. The report comes just weeks after the Office for
Budget Responsibility (OBR) cut its forecast for potential productivity, or
what workers in the UK can produce an hour, triggering warnings of damage to
living standards, wages and government tax receipts. The EEF predicts demand
for skills will rocket and urges the government to launch grants for
apprenticeships and reform the education system to ensure leavers’ skills match
needs of businesses. GUARDIAN

HMRC’s £6m tax
evasion campaign used agency linked to tax haven

A multimillion-pound Revenue & Customs publicity
campaign to stamp out tax evasion and avoidance used an advertising agency
ultimately controlled in an offshore haven. HMRC spent more than £6 million on
the campaigns, including £300,000 specifically on offshore evasion. Among the
agencies used was TNS, a research agency, whose ultimate parent company and
controlling party is WPP, the world’s biggest advertising company which is
incorporated in Jersey and was founded by Sir Martin Sorrell, the billionaire
tycoon. TIMES

Number of City
financiers earning more than €1m rises to nearly 3,000

The European Banking Authority (EBA) said the UK had more
than three times as many high-earning bankers as the rest of the EU combined. The
regulator’s data showed that the number of high earners across the EU rose
21.6% to 3,865 in 2014, from 3,178 in 2013. The majority – 2,429 – worked in
investment banking. It was the first year when the EU bonus cap was implemented
and new EBA rules on banks reporting staff remuneration took effect. The
regulator’s data showed 16 people at financial institutions based in Britain
took home more than €10m in 2014, with one earning €24m-€25m. Since the bonus
cap was introduced in 2014, limiting bankers’ bonuses to 100% of salary, or
200% if shareholders approve, the UK and France have implemented waivers. The
UK has excluded hundreds of smaller, less risky firms such as asset managers
and brokers. GUARDIAN

UK employees work
longer hours with no gain in productivity

UK think tank the Smith Institute has found that two-thirds
of employees say they are working longer than two years ago, but only 10 per
cent believe they are more productive. A quarter of staff believed their
productivity had declined over the period. Productivity is a measure of output
for every hour worked. The Office for Budget Responsibility downgraded UK
productivity in the last quarter of 2015 after nine months of improvements,
delaying UK economic recovery. Average output per hour is already around a
fifth higher in the rest of the G7 nations compared with the UK. Paul Hackett,
director of the Smith Institute, said: “Making the cake bigger by way of
productivity improvements is critical to growing the economy, but giving the
workforce a smaller slice inevitably leaves employees feeling cheated.” INDEPENDENT

Six million hit by
stealth tax raid on wages: £40 a month worse off after opting out of state
pension scheme

The reforms hit millions who opted out of a scheme to top up
the state pension in return for lower National Insurance contributions. The
changes were announced three years ago but come into force now. Someone on
£40,000 a year could lose as much as £40 a month from take home pay. Experts
estimate around 1.5 million employees in the private sector and five million
public sector staff will be affected. The reforms are expected to raise £5.5
billion for the Treasury. Steve Webb, the ex-pensions minister now director of
policy at insurers Royal London, said: ‘I think the Chancellor had hoped that
no one would notice this rather large tax increase smuggled out.’ The
Government is replacing the second state pension (Serps) – which let workers
‘top up’ their basic pension – with so-called single-tier pensions. In a
further blow, more than half a million middle class workers will miss the full
benefit of the Budget tax breaks. Some 585,000 taxpayers will see the amount
they contribute in NI soar by more than £500 for a couple. This will wipe out
much of the benefit of the headline-grabbing tax break, which saw the start of
the 40p tax rate increased to £45,000. Middle class earners were told to expect
a £1,406 benefit. But due to the changes, a couple earning £48,000 each would
pay £524 more NI in a year by 2017 to 2018, according to accountancy firm PWC.
They would still be better off overall, but by around £882 a year. DAILY MAIL

Train operator GWR's
adverts banned for suggesting service owned by public

The train operator Great Western Railway has been banned
from running adverts that suggest its service is publicly owned. A poster
campaign introducing the company formerly known as First Great Western when it
rebranded last September stated: “The railway belongs to the region it serves.”
Complainants to the Advertising Standards Authority pointed out that GWR
belongs to its owner, FirstGroup, a multinational transport company listed on
the London Stock Exchange, and not the people of south-west England. The ASA
ruled that the advert was misleading and “might encourage consumers to use or
enquire about using the service, for example, out of regional loyalty or
because they believed profits directly belonged to the local region”. It told
GWR not to suggest in future that the railway franchise was publicly owned, if
that was not the case. Cat Hobbs, director of the campaign group We Own It,
said: “Privatisation is now so unpopular that train companies can get good PR
by pretending to be publicly owned. The GWR advert is misleading – it’s also a
sign that it’s time for real public ownership.” The ASA did not upheld a
complaint about another GWR advert that described Isambard Kingdom Brunel as
“our illustrious founder”, ruling that consumers were likely to understand
founder in a broad sense, rather than the founder of the company itself. GUARDIAN

SOURCE TELEGRAPH: Iain
Duncan Smith resigns as Work and Pensions Secretary in protest at cuts to
disability benefits

Iain Duncan Smith has dramatically resigned from the
Government in protest at George Osborne's proposed cuts to benefits for the
disabled. The former Conservative leader said that plans to cut the benefits
paid to the disabled by more than £1 billion were a "compromise too far."
He added that they are "not defensible" when announced alongside a
budget that benefits higher earning taxpayers. Mr Duncan Smith also accused the
Chancellor of forcing through cuts to welfare for "political" rather
than national economic reasons. George Osborne had offered to delay planned
changes to disability benefits with sources saying they would be "kicked
into the long grass". However, the offer was not enough to prevent Mr
Duncan Smith, a former Conservative leader, from walking out of the Government.
He added: "I am unable to watch passively whilst certain policies are
enacted in order to meet the fiscal self imposed restraints that I believe are
more and more perceived as distinctly political rather than in the national
economic interest. "Too often my team and I have been pressured in the
immediate run up to a budget or fiscal event to deliver yet more reductions to
the working age benefit bill. There has been too much emphasis on money saving
exercises and not enough awareness from the Treasury, in particular, that the
government's vision of a new welfare-to-work system could not be repeatedly
salami-sliced." He made it clear in his letter than he believes the
Government should instead be focussing on reducing benefits for pensioners
which have largely been protected during the austerity drive.

SOURCE GUARDIAN: Latest budget preserves income of wealthier households, while poorest
could lose 12% of their income by 2019

Iain Duncan Smith resigned as the Tory work and pensions
secretary on Friday, accusing chancellor George Osborne of delivering a “deeply
unfair” budget that inflicted substantial reductions in disability benefits
while offering tax cuts for the most affluent. Sustained benefit cuts will
result in many households in the bottom 20% of earners losing up to 12% of
their income by 2019, according to a report published on Monday by the
influential Institute for Fiscal Studies (IFS). Meanwhile, households in the
top half of income brackets will be no worse off and even the poorest
pensioners will be 2% in the red at most. Paul Johnson, the director of the
IFS, said: “Raising the threshold for paying higher-rate tax is clearly helping
people in the middle- and upper-income brackets, while the cuts to benefits
reduce the incomes of families on lower incomes.” He highlighted the switch
from tax credits to universal credit as a major blow to working households at
the bottom of the income scale. “Once universal credit is in place, the benefit
system is much less generous,” he said. A chart in the report illustrating the
impact of tax and benefit changes until the end of the current parliament shows
the lowest 10% of households with children losing almost 10% of their income,
while the next band lose more than 12%. The poorest 10% of pensioners lose 2%
of their income; pensioners in the top 20% of earners gain or avoid losing any
income at all.

Thursday, 24 March 2016

IFS backs Duncan
Smith: latest budget preserves income of wealthier households, while poorest
could lose 12% of their income by 2019

Iain Duncan Smith resigned as the work and pensions
secretary on Friday, accusing chancellor George Osborne of delivering a “deeply
unfair” budget that inflicted substantial reductions in disability benefits
while offering tax cuts for the most affluent. Sustained benefit cuts will
result in many households in the bottom 20% of earners losing up to 12% of
their income by 2019, according to a report published on Monday by the
influential Institute for Fiscal Studies (IFS). Meanwhile, households in the
top half of income brackets will be no worse off and even the poorest
pensioners will be 2% in the red at most. Paul Johnson, the director of the
IFS, said: “Raising the threshold for paying higher-rate tax is clearly helping
people in the middle- and upper-income brackets, while the cuts to benefits
reduce the incomes of families on lower incomes.” He highlighted the switch
from tax credits to universal credit as a major blow to working households at
the bottom of the income scale. “Once universal credit is in place, the benefit
system is much less generous,” he said. A chart in the report illustrating the
impact of tax and benefit changes until the end of the current parliament shows
the lowest 10% of households with children losing almost 10% of their income,
while the next band lose more than 12%. The poorest 10% of pensioners lose 2%
of their income; pensioners in the top 20% of earners gain or avoid losing any
income at all. GUARDIAN

Only one in 10 homes
sold under right to buy are replaced in England

In April 2012, the government relaunched the right to buy
scheme and tenants in London now get discounts of up to £103,900, while those
outside the capital can buy their property at up to £77,900 below market price.
But sccording to the latest data by the Department for Communities and Local
Government (DCLG), there have been 49,573 sales since the scheme was
relaunched, while 4,594 have been started on site or acquired by councils. Currently
the right to buy is for tenants of council-owned homes and those that have been
transferred to other organisations with a “preserved” right to buy. Campbell
Robb, chief executive of Shelter, said: “This will not only make an impossible
situation even worse, it’s also a terrible response to our housing crisis... Before
the election, the government was happy to suggest that it would replace every
home sold off under right to buy one for one. Now, it is rowing back from this
by not replacing the homes sold off, with the homes it is building often only
affordable for higher earners.” GUARDIAN

A clampdown on tax evaders who have salted cash away
offshore will fail to hit its target of more than £1 billion because of a lack
of resources at the tax office, the Government’s own budget watchdog has
admitted. The Office for Budget Responsibility (OBR) said the measures to
collect tax from dodgers who had funnelled cash into havens such as Jersey,
Guernsey and the Isle of Man would raise just £270 million rather than the
£1.05 billion which had been trumpeted – a £780 million shortfall. The alert
was buried in the fine details of the OBR’s 260-page report on last week’s
Budget. It stated: ‘HM Revenue & Customs is less optimistic about how much
of the lost yield can be recouped through additional compliance activity, on
the basis that they are unlikely to be able to work the higher number of
additional cases on top of existing workloads.’ In 2013 the Government
announced an amnesty for tax dodgers using offshore tax havens and at the same
time it warned that it would be vigorously pursuing those who did not hold
their hands up voluntarily. The number of tax dodgers coming forward on a
voluntary basis was lower than HMRC had expected and last year it claimed that
it would recoup the shortfall by hammering those who were trying to evade
detection. Tax barrister and QC Jolyon Maugham told The Mail on Sunday: ‘The
wealthy are escaping the consequences of tax evasion because HMRC cannot pursue
the cases. The idea of an amnesty is that you front up now and avoid the bad
consequences later. This OBR report reveals that the equation is now: front up
now but if you don’t there’s not much we can do.’ The admission that HMRC is
too stretched to chase tax evaders will fuel criticisms that while the
Government has talked tough on tax avoidance and evasion, its austerity
programme is in reality hampering tax collection. The report from the OBR also reveals that the so-called
Google Tax – a levy on company profits that are routed via ‘contrived
arrangements’ to tax havens – is set to generate just one-third of the receipts
that the Treasury had expected. DAILY MAIL

Leading Tory councillors across the country, dismayed by key
elements of the education white paper outlined by the government last week, are
calling on education secretary Nicky Morgan to rethink her policy of compulsory
academisation for all schools. Their concerns echo those of many teachers and
parents, who took part in rallies in London and many other towns and cities on
Wednesday, to protest against the government’s forced academy programme. The
government’s white paper, Educational Excellence Everywhere, says all schools
that have not begun to convert to academy status by 2020 will be directed to do
so under new powers. Councils will lose responsibility for the remaining
maintained schools, the majority of which will be expected to join
multi-academy trusts, regardless of performance. Melinda Tilley, cabinet member
for education for Oxfordshire county council, which covers the prime minister’s
Witney constituency, said: “If it’s not broke don’t fix it. I don’t think
schools should be forced. We’ve been supportive of the government’s agenda. We
were going along quite well, helping schools to convert where we could. Now all
of a sudden they are going to force the rest of them. It makes my blood boil.
I’m put in a position where I can’t protect schools. One size does not fit
all.” GUARDIAN

Tesco has launched seven branded product lines names after farms
that do not exist. Willow Farms whole chicken, Boswell Farms diced beef, and
Rosedene Farms blueberries were all found to come from manufacturers with no
relation to the names on the packaging of the final product. Some of the foods
were imported from overseas and given British names to make them sound local. Farmers
Weekly, a trade magazine, did a spot check at Acre Lane Tesco in Brixton and
recorded the origins of products that had been given British-sounding farm
names. Examples include Rosedene Farms – apples (UK), pears (Belgium),
strawberries (Spain), blueberries (Chile); Nightingale Farms – celery (Spain),
cherry tomatoes (Spain, Morocco); Woodside Farms – pigmeat products (UK,
Holland, Denmark, Germany, “EU”). Only Boswell chicken was found to be 100 per
cent British and featured a Union Jack prominently on the label to signal this
to consumers. Advertising agencies say that British sounding names and rural,
historic or nature references are reassuring to shoppers. Tesco is not the only
store to use made up farm names on its products. The Guardian reports that Aldi
does so too. The Independent has contacted Aldi for comment. INDEPENDENT

What the Dickensian!! Sports Direct founder
Mike Ashley refuses to appear before committee investigating pay and working
conditions

The riposte, in which the billionaire called the
parliamentarians “a joke”, is the latest instalment in an increasingly bitter
battle between Ashley and the Commons’ business, innovation and skills (BIS)
committee, which took the unusual step of issuing a summons to the Newcastle
United owner last week. The inquiry by the committee, which has threatened
Ashley with being in contempt of parliament if he fails to attend a hearing on
7 June, follows a Guardian investigation last year that found workers at the
sportswear group’s Shirebrook warehouse were receiving, in effect, rates of pay
below the minimum wage. Undercover reporters employed at the Derbyshire
facility discovered thousands of workers were subjected to an extraordinary
regime of searches and surveillance, while local primary schoolteachers told
the Guardian pupils would remain in school while ill – and return home to empty
houses – as parents working at the depot were too frightened to take time off
work. The disclosures prompted the Institute of Directors to brand the company
a “scar on British business” and former shadow business secretary Chuka Umunna
to file an urgent parliamentary question, which resulted in the business
minister, Nick Boles, being summoned to the Commons to answer questions on the
scandal. During the debate, a succession of MPs called for HM Revenue and
Customs to investigate if the company had breached minimum wage legislation. Sports
Direct responded by announcing a pay rise for its staff, as well as a review of
all agency workers’ terms and conditions. GUARDIAN

Pop-up village in
south-east London to house homeless families

A council in south-east London has created what it describes
as “the UK’s first pop-up village” to house families who are forced to live in
B&Bs in other parts of the capital. Rapidly rising property prices and
rents, combined with the loss of social housing through right to buy, have put
councils under growing pressure to find new ways to help people off their
housing lists. In Lewisham one solution is a £4.3m scheme to provide 24 homes
and 880 sq m of business space that can be picked up and moved at a later date,
allowing the council to make use of vacant brownfield land while longer-term
projects are finalised. With the planning process notoriously complicated and
long, the local council decided to put the area to use for temporary homes.
Just over a year after planning was granted for the temporary village, the
cluster of two-bedroom flats is almost complete and the first tenants should
move in in June. House prices in the borough have risen by 15% over the past
year, according to the Land Registry, reaching an average of £447,291. Rents
are also high: last year the average cost for a two-bedroom flat was £1,312 a
month. The factory-built flats arrived on the site late last year, each home coming
in two pieces: one is the living area with all of the services and kitchen
built in, the second provides the bedrooms. The homes have been designed by
Rogers Stirk Harbour + Partners, the architects behind the YMCA’s Y:Cube –
individual units for single people in need of housing. “Our only constraint is
the volume you can get on the back of a truck and get round the country,” said
Ivan Harbour. The architects have pushed things to the limit, building homes
that are bigger than the London space standards, with high ceilings that
Harbour said “have the scale of the ground floor of a Victorian house”. The
flats are well insulated and will cost just £10 a month to heat in winter
months. They have a lifespan of 60 years and can be moved several times in that
period and configured however the council needs them to be. GUARDIAN

CEO Tidjane Thiam said some employees in the beleaguered
bank’s markets division had concealed perilous bets from senior management in
the run-up to a cost-cutting drive in October. It meant the investment loss the
bank had assumed it made could have been far greater. In an astonishing
admission, he told Bloomberg: ‘This wasn’t clear to me, it wasn’t clear to my
chief financial officer, it wasn’t clear to many people inside the bank... A
lot of the problems in the investment bank are that people have been trying to
generate revenue at all costs... That’s why I said there needs to be a cultural
change, because it’s completely unacceptable.’ Staff bonuses for 2015 have been
slashed by 36 per cent and Thiam himself has asked for a 40 per cent bonus cut.
About 35,400 UK banking jobs have been axed since 2009 and analysts warned the
picture remained bleak. Laith Khalaf of Hargreaves Lansdown said: ‘A lot of banks
are trying to remove some of the riskier areas of their business because
they’re being more heavily penalised by regulators.’ DAILY MAIL

Budget watchdog predicts
interest rates will FALL below 0.5% record low for some of the next two years

The Government has based its economic forecasts on a cut in
interest rates from the record low of 0.5 per cent. The Office for Budget
Responsibility said the outlook for rates in the UK had changed ‘significantly’
in recent months. ‘Our forecast is consistent with Bank rate being reduced
below 0.5 per cent for some of the next two years,’ the OBR said in a report
published alongside the Budget. The OBR added that rates are not expected to
reach 0.75 per cent until 2019 – a full decade after the Bank of England cut
rates to 0.5 per cent. The outlook for rates has changed dramatically in recent
months. In July last year, Governor Mark Carney said the decision over to when
to raise interest rates ‘will likely come into sharper relief around the turn
of this year’. But he recently said rates could be cut ‘towards zero’ if the
economy needs extra support. DAILY MAIL

The Sutton Trust educational charity has been carrying out
similar surveys for more than a decade, and though it reports “small signs” of
progress, this year’s results confirm what has long been known – that if you
have a private education, you are considerably more likely to get to the top of
British public life. Just 7% of the population attend independent fee-paying
schools, while comprehensive schools currently educate 88% of the population.
Yet the survey reveals that almost three quarters (71%) of top military
officers were educated privately, with 12% having been taught in comprehensive
schools. In the field of law, 74% of top judges working in the high court and
appeals court were privately educated, while in journalism, more than half
(51%) of leading print journalists went to independent schools, with one in
five having attended comprehensive schools. In medicine, meanwhile, Sutton
Trust research says 61% of the country’s top doctors were educated at
independent schools; nearly a quarter (22%) went to grammar school and the
remainder to comprehensives. In politics, the picture is a little better, with
under a third (32%) of MPs having been privately educated, though that figure
goes up to half of the cabinet, compared with 13% of the shadow cabinet.
Graduates of Oxford and Cambridge universities also continue to dominate the
field, though they educate less than 1% of the population. In law, nearly three
quarters (74%) of the top judiciary went to Oxbridge; 54% of the country’s
leading journalists went to Oxbridge, and just under half (47%) of the cabinet
attended Oxbridge, compared with 32% of the shadow cabinet. It reveals that
award-winning British actors are more than twice as likely to have had a
private education than award-winning pop stars. While 42% of British Bafta
winners went to an independent school, just 19% of British winners at the Brit
music awards were educated privately. While Eddie Redmayne, star of The Danish
Girl; Homeland actor Damian Lewis; and Tom Hiddleston, now starring in the BBC
series The Night Manager, famously went to Eton College, the Sutton Trust
points out that British music stars like Adele, Imogen Heap and Jessie J found
success after attending the state-funded Brit School in Croydon.

ONS statistician Nick Palmer said: “This latest figure is
rather higher than the 697,000 people who said they were on these contracts in
late 2014. Though at least some of this increase may be due to greater public
recognition of the term zero-hours contract, there’s also nothing to suggest
this form of employment is in decline.” On average, someone on a zero-hours
contract usually worked 26 hours a week. About one in three people on a
zero-hours contract wanted to work more hours, with most wanting them in their
current job as opposed to a different job that offered more hours. In
comparison, 10% of other people in employment wanted more hours, said the ONS. Research
by the TUC shows that average weekly earnings for zero-hours workers are £188,
compared with £479 for permanent workers. The TUC general secretary, Frances
O’Grady, said: “Many people on zero-hours contracts are unable to plan for
their future and regularly struggle with paying bills and having a decent
family life... The European Union is proposing better rights for zero-hours
workers – another reason why workers should be worried about the risks of
Brexit.” GUARDIAN

Top headhunters admit pay for UK bosses is
‘absurdly high’

Britain’s chief executives are wildly overpaid, and there
would be no negative impact on the economy if their salaries were slashed, a
groundbreaking study of the country’s top headhunters reveals. The London
School of Economics report is a damning indictment of the state of executive
pay, and comes as an analysis by the High Pay Centre of FTSE 100 company
accounts shows that the average pay package of a top CEO is now £4.6m a year. Interviews
with the top 10 international recruitment firms behind 70-90% of chief
executive appointments in recent years found a consensus among so-called
corporate kingmakers that levels of remuneration for the most senior executives
are “absurdly high”. Headhunters claimed that, for every appointment of a CEO,
another 100 people could have filled the role just as ably, and that many
chosen for top jobs were “mediocre”. The market for executive jobs, however,
has become so distorted that it would amount to career suicide for a chief
executive to indicate that he or she would be willing to work for less. The
study’s authors write: “If one were to offer to do the job for less, would that
tip the decision in his or her favour? All the headhunters agreed that this
would be a poor strategy. “Indeed, it might be that asking for a larger
remuneration would have a positive effect in securing the appointment.” GUARDIAN

London council
launches low cost letting agency for private renters

Haringey council in north London said its online agency,
Move 51⁰ North, was the first in the UK to offer private tenants an alternative
to mainstream letting agents. Alan Strickland, Haringey’s cabinet member for
housing and regeneration, said the agencies would “help stamp out rip-off fees
and charges”. Research by Citizens Advice last year found that tenants were
paying an average of £337 in charges, but that they varied hugely from agent to
agent. Costs for checking references ranged from £6 to £300, while renters also
facedcharges of between £15 and £300 for simply renewing their tenancies. Haringey
council’s agency will charge tenants a fee of £180 to cover administration and
£72 for credit checks. There are no renewal fees if they continue their tenancy
beyond the original contract period. Landlords will be offered lettings and
management services at the market rate, and access to the council’s maintenance
services for repairs. GUARDIAN

Final report “a
complete waste of time and taxpayers’ money” - UK watchdog accused of bowing to
pressure from 'big six' energy suppliers

The Competition and Markets Authority (CMA) inquiry,
launched in June 2014, was intended to clear up once and for all whether SSE,
Iberdrola’s Scottish Power, British Gas-owner Centrica, RWE npower, E.ON and
EDF Energy were abusing their control of the market. However, the regulator has
retreated from more radical proposals amid ferocious lobbying from the energy
sector. Opposition MPs, independent power companies and fuel poverty groups all
warned the CMA review, now concluded, would do little to stop householders
paying £1.7bn a year too much for their energy. The competition watchdog has
called for a price cap on tariffs covering the four million households on
prepayment meters and wants a customer database to be set up to make switching
supplier more easy. But the CMA has not widened that safeguard cap to include
those stuck on high-cost standard variable tariffs and wants to scrap a
four-tariff limit established only recently by energy regulator Ofgem to make
price comparisons easier. Earlier speculation that the big six would be broken
up to separate their supply from their power generation arms was shelved by the
CMA as a proposal last summer amid endless lobbying against it by the
companies. GUARDIAN

Paddy Power's
£280,000 penalty equal to three hours' trading

Bookmaker Paddy Power paid the donation to charity after the
Gambling Commission ruled it had encouraged a problem gambler to keep betting
until he lost five jobs, his home and access to his children. The man in
question was a frequent user of fixed odds betting terminals (FOBTs), which
have been described as the “crack cocaine” of gambling, allowing players to
stake £100 every 20 seconds. But Paddy Power took less than three hours last
year to bring in enough money to cover the £280,000 penalty donation. The
penalty donation was also based on the firm’s failure to perform sufficient
checks to ensure customers were not using its machines to launder the proceeds
of crime. FOBTs are part of Paddy Power’s “machine gaming” division, whose
revenues soared by 17% to £94m last year. The Gambling Commission’s powers
include imposing a financial penalty on a company and revoking its licence to
operate if it breaches the act. Its verdict on Paddy Power, however, resulted
only in the “voluntary” £280,000 payment to a socially responsible cause and a
promise to commission a review and “share learning” from the case with other
firms. The company said it had enjoyed a “truly transformational” year in 2015,
with pre-tax profit up 8% to £139m. Shareholders were rewarded with an 18%
increase in the full-year dividend to £1.39 per share. GUARDIAN

£91m 'Houdini' bonus
tax dodge: UBS and Deutsche Bank lose case

The banks had each tried to pay more than £91m of bonuses in
the form of shares in an offshore company, established solely for the purpose
of paying the awards. Through a combination of conditions attached to the
shares plus a waiting period of two years, the banks hoped to cut the tax bill
on the bonuses to 10pc, thus avoiding paying income tax and national insurance.
But the banks' efforts to cut their bills were “the most sophisticated attempts
of the Houdini taxpayer to escape from the manacles of tax”, Justice of the
Supreme Court Lord Reed said. Prior to its defeat at the Supreme Court, UBS had
won the case in the Upper Tier Tribunal and in the Court of Appeal. Deutsche
Bank lost in its first hearing and so paid the tax, before winning in the Court
of Appeal, and then losing this latest round. HMRC, which has been fighting the
case for 12 years, said it intended to challenge similar arrangements at other
businesses. Treasury minister David Gauke said foreign banks were welcome in
the UK only if they played by the rules. TELEGRAPH

Criticism as
£30-a-week disability benefit cuts go ahead

Peers have backed down in their battle with MPs over cuts to
disabled people's benefits after ministers invoked special powers to push them
through. The government was twice defeated in the House of Lords over a £30 a
week cut to Employment and Support Allowance (ESA) for certain claimants. But
it is set to go ahead after peers deferred to the elected Commons. Ministers
claimed "financial privilege" to assert the Commons' right to have
the final say on budgetary measures. Ministers argue the changes will encourage
people to get into work, but this is strongly disputed by opponents. The cuts
in weekly support from £103 to £73, contained in the Welfare Reform and Work
Bill, will apply to new ESA claimants in the work-related activity group,
bringing the rate into line with Jobseeker's Allowance. It will affect people
who are deemed unable to work at the moment but capable of making some effort
to find employment, including attending work-focused interviews and taking part
in training. Disability rights campaigners Scope said the changes would have a
"harmful impact" on half a million people. BBC NEWS

A third of £1m-plus
homes paid for in cash since 2011

Analysis of Land Registry data from retirement lending
advisory firm Bower Private Clients (BPC) is further evidence of the widening
gap between the housing haves and have-nots. It says that more than 7,200
properties in this price bracket are being bought a year without a mortgage. Cash
buyers have spent more than £63bn in total on £1m-plus homes in England and
Wales since 2011, spending on average £1.75m for a property. In London, 22,852
properties costing £1m-plus have been bought for cash since 2011, and 7,864
elsewhere in the south-east. This compares with 641 in the north-west, 496 in
the West Midlands and 239 in Yorkshire and Humberside. At the bottom of the
table were Wales and the north-east, with 52 and 79 respectively. The analysis
comes after a report from a high street lender predicted that the number of
properties in Britain worth £1m or more would more than triple by 2030. Less
than 500,000 homes in the UK are currently valued at £1m plus, but Santander
said this would increase to more than 1.6m in the next 15 years. GUARDIAN

The FTSE 100-listed housebuilder said sales were boosted by
the Government's Help to Buy scheme, which offers an equity loan and a smaller
deposit for buyers of newly-built homes. Taylor Wimpey said it sold 37 per cent
of its houses through the scheme - which is scheduled to run until 2021. The
strong profit gain came after the UK's third largest builder sold 13,219 homes
last year, up 7.5 per cent from 12,294 in 2014, with average selling prices
hitting £230,000 apiece, an increase from £213,000 a year earlier, which in
turn helped boost revenue by 17 per cent to £3.14billion. Taylor Wimpey is the
latest house builder to post strong results with Persimmon, another FTSE 100
housebuilder, recently posting 2015 pretax profit growth of 34 per cent, while
Barratt Developments' saw its half-year profits soar by 40 per cent.

Barratt Homes predicted continuing demand for its houses as
it announced soaring first-half profits, fuelled by a shortage of homes and the
government’s help-to-buy scheme. The government recently extended help to buy
until 2021 and introduced it for buyers in London. Some critics have said the
move will simply push up prices in the capital, making houses less affordable.
Pre-tax profits at Barratt Homes, Britain’s biggest housebuilder, rose 40% to
£295m in the six months to the end of December as revenues rose 19% to £1.88bn.
Almost a third of Barratt’s sales were made under the government’s help-to-buy
programme, which underwrites a portion of a purchaser’s mortgage for a newly
built home. The government is trying to encourage private housebuilders such as
Barratt to build more homes to deal with a housing crisis caused by decades of
supply failing to meet the demands of a growing population. Shortage of supply
lies behind soaring house prices, particularly in London, and fears are growing
that the market is heading for a crash after overseas buyers snapped up
property for investment or speculation purposes.

Thursday, 3 March 2016

The tax arrangements of international companies have come
under close scrutiny recently. Several have been accused of using legal methods
to minimise their tax bills. In Google's case, its tax structure allows it to
pay tax in Ireland, even when sales appear to relate to the UK. In January it
struck a deal with UK tax authorities to pay an extra £130m in tax for the
period from 2005, but that deal was heavily criticised. Earlier on Wednesday
the UK Public Accounts Committee (PAC) said the £130m settlement "seems
disproportionately small", compared with the size of its UK business. Europe's
competition authorities have been examining whether some deals struck by big
companies with national tax authorities amount to illegal state aid. Starbucks
and Fiat Chrysler were told they must pay back up to €30m (£22m) in taxes after
European tax breaks were ruled illegal. But the two companies disagreed with
the ruling, and Starbucks said it would appeal against the decision. Further
investigations into tax deals, including those covering Amazon and Apple, are
continuing. BBC NEWS

Starter Home scheme: 200,000
“lucky” buyers could make a £141,000 taxpayer-funded profit, but raise prices
for everyone else

The government’s starter homes initiative could deliver a
taxpayer-backed windfall of £141,000 each to 200,000 lucky first-time buyers,
but 2 million more aspiring homeowners will be stuck renting, campaigners say. The
scheme, which allows developers to replace shared ownership and affordable
rented homes with properties sold at a 20% discount, has been widely criticised
since it was first announced in December 2014. One of the key concerns for
housing campaigners is that the homes can be sold on at the open-market rate
after five years. Lobby group Generation Rent said buyers could therefore stand
to make a profit of £228,139 on a home bought for £383,200. Generation Rent
said that the original buyers stood to gain, while those who missed out getting
onto the scheme would find it ever harder to get on the housing ladder. The
group is calling for the homes to be subject to rules saying that they can only
be sold on at a 20% discount. Betsy Dillner, the director of Generation Rent,
said this would help many more first-time buyers “instead of a jammy handful of
winners in a multibillion pound raffle”. Research carried out by Savills for
the Local Government Association (LGA) found that the discounted starter home
prices were out of reach for all people in need of affordable housing in 220
council areas and for more than 90% in a further 80 council areas. GUARDIAN

Britain's poorest
households to suffer five years of ZERO income growth while the rich get
richer

The poorest households in Britain will suffer a five-year
period of zero income growth, while the country's richest will see their
incomes rise 2.3 per cent a year above inflation, a study by the Institute for
Fiscal Studies (IFS) has forecast. And with planned cuts to benefits and tax
credits, the proportion of children in relative poverty will rise, as will the
number living in 'absolute poverty', the IFS report said. The think-tank
warned: 'Income inequality will rise significantly over the course of the
current Parliament.' Planned cuts to working age benefits will reduce incomes
in poorer households by 3 per cent within the next five years, today's study
suggested. In real terms, average gross earnings in the UK were nearly 5 per
cent lower in 2013 than before the recession, the IFS said. Between 2013/14 and
2015/16, real growth in incomes, after inflation, was 4.1 per cent for the
poorest, 4.9 per cent for average households and 3.2 per cent for those near
the top, the think-tank estimated. James Browne, one of the authors of the
report, said: 'Following an historically slow recovery in living standards
after the recession, stronger growth in household incomes at all income levels
over the last two years will have been welcome news... For some, particularly
the better-off and pensioners, this is likely to continue over the next five
years as earnings and state pensions grow more quickly than inflation... But
the prospects are not so good for others, including large families with low incomes,
who will bear the brunt of planned benefit cuts.' DAILY MAIL

The rate rip-off:
Banks rake in huge and easy profits by cutting savings faster than mortgages

Banks have to pay savers a return to convince them to leave
their cash in their accounts. They then lend out this money and charge a higher
interest rate, creating a profit margin. The larger the gap, the harsher the
bank is treating its customers. Over the past three years this interest-rate
margin has ballooned at Lloyds, Nationwide, Santander and Barclays. In 2013,
the gap at Lloyds was 2.23 per cent, indicating that savers were earning 2.23
per cent less than borrowers were paying on their loans. In its latest set of
reports, the gap had expanded to 2.4 per cent, helping the bank increase
profits from banking customers by £286 million to £3.5 billion last year. And
what’s more, it’s decided it can afford to pay a dividend to its shareholders
for the first time in six-and-a-half years. Nationwide’s interest-rate margin
has risen from 1.02 per cent to 1.46 per cent. Profits soared 32 per cent to
£1.2 billion last year. Santander’s margin grew from 1.55 per cent to 1.83 per
cent between 2013 and 2015. It made a profit of £920 million in 2015 — £252 million
lower than the previous year. Barclays yesterday revealed that its margin for
2015 was 2.99 per cent, up from 2.91 per cent in 2013. Its High Street arm made
a profit of £3 billion, a 5 per cent rise on 2014. Anna Bowes, of consumer
website SavingsChampion, says: ‘Banks are penalising savers to make a profit.
It’s unfair and hurts people who are trying to do the right thing... The number
of cuts to savings rates is unprecedented.’ Around £160 billion of savings sits
in UK accounts that pay a paltry 0.5 per cent interest or less. Ian Gordon, a
banking analyst at Investec, says banks haven’t been able to lend out as much
as they’d like. That means they’re sitting on piles of savers’ cash that isn’t
making them any money. ‘The Bank of England base rate is so low at 0.5 per cent
that banks are desperately seeking to maintain their profits — and that means
squeezing savers,’ he says. ‘The clearest conclusion is that the pain for
savers will only get worse.’ Savers also appear to be losing out as banks
battle to tempt mortgage and loan customers. Loan rates for borrowing £7,500 to
£15,000 have fallen from 5.1 per cent in 2013 to 3.3 per cent today. To fund
these discount deals, banks have hit savers with a devastating round of rate
cuts. DAILY MAIL

RBS pays chief
executive Ross McEwan £3.8m as it reports £2bn loss

The bank’s full-year results for 2015 follow its admission
last month that it was on track to report its eighth consecutive year of losses
because of a £2.5bn hit to profits for a string of problems, including having
to pay compensation for payment protection insurance mis-selling. Shares in the
bank, 73%-owned by the taxpayer, slumped 10% in early trading after the figures
were announced. McEwan – who has received the highest pay for a chief executive
of the bank since the bailout – said further problems lay ahead for the bank,
particularly from “big conduct” issues. Among these is a penalty, yet to be
determined and which could run to billions of pounds, for the way it sold US
mortgage bonds in the run-up to the 2008 banking crisis. The results – which
followed a £3.5bn loss a year ago – mean that the bank has incurred more than
£50bn of losses since 2008, when £45bn of taxpayer funds was used to prevent it
from collapsing. The performance of the bank was accompanied by disclosures
about pay. It said 121 of its staff received more than €1m (£800,000) during
the year while its former chief executive Stephen Hester, who was forced out in
2013, received £2.1m from bonus schemes that dated to his time at the bank. GUARDIAN

Lloyds hands CEO £8.5m pay package despite 7% profit fall

Lloyds Banking Group has handed its chief executive an £8.5m
pay deal and ignited its share price by announcing a special dividend – despite
reporting a 7% fall in profits. António Horta-Osório’s pay was disclosed
alongside 2015 financial results showing profits had been knocked to £1.6bn by
a further £4bn charge for mis-selling payment protection insurance (PPI). The
bank, bailed out in 2008, has now incurred a total bill of £16bn for the
long-running scandal which drove it to a fourth-quarter loss. The government
has been gradually cutting back its stake, from 43% to less than 10%, but
despite Thursday’s rally the shares remain below the 73.6p break even price. He
was also handed shares worth £3.6m in a long-term incentive plan, which could
pay out in three years’ time. His 10-strong management team were handed shares
worth £17m in the same scheme. The total bonus pool was cut to £353m from £369m.
Sixty-six staff received total pay of €1m (£800,000) or more. GUARDIAN

The FTSE 100-listed housebuilder said sales were boosted by
the Government's Help to Buy scheme, which offers an equity loan and a smaller
deposit for buyers of newly-built homes. Taylor Wimpey said it sold 37 per cent
of its houses through the scheme - which is scheduled to run until 2021. The
strong profit gain came after the UK's third largest builder sold 13,219 homes
last year, up 7.5 per cent from 12,294 in 2014, with average selling prices
hitting £230,000 apiece, an increase from £213,000 a year earlier, which in
turn helped boost revenue by 17 per cent to £3.14billion. Taylor Wimpey is the
latest house builder to post strong results with Persimmon, another FTSE 100
housebuilder, recently posting 2015 pretax profit growth of 34 per cent, while
Barratt Developments' saw its half-year profits soar by 40 per cent. DAILY MAIL

UBS confirms fresh
tax evasion probe in the US

The Swiss bank said US regulators were investigating
potential sales of so called "bearer bonds". These bonds can be
transferred without registering ownership, enabling wealthy clients to
potentially hide assets. The fresh investigation by the US Attorney's Office
for the Eastern District of New York and from the US Securities and Exchange
Commission comes after UBS paid $780m (£512m) in 2009 to settle a separate
Justice Department tax-evasion probe. And it comes as authorities in a range of
countries are considering examining HSBC's actions in helping more than 100,000
wealthy individuals avoid paying tax. UBS results for the full year, were hit
by more than $1bn to settle past scandals. In November, it was one of six banks
fined by UK and US regulators over their traders' attempted manipulation of
foreign exchange rates, paying 774m Swiss francs in total. It also paid $300m
in the second quarter to settle charges it helped wealthy German clients evade
tax. The US Department of Justice (DOJ) is continuing to investigate UBS over
currency manipulation allegations. BBC NEWS

Asda backs down over
food bank ban

The supermarket chain Asda has announced a policy U-turn
that will see the return of permanent collection points for food banks and
other charities in all its UK stores. The move comes after news broke that the
collection points were being removed across Britain. Some food banks said the
move would threaten 25% of their supplies, while the Trussell Trust food bank
network warned of losses of food of up to a third. Asda has more than 525 UK
stores and is owned by the US retailer Walmart. In response to its initial
policy change, 88,000 people signed a petition hosted by the campaigning
organisation 38 Degrees and a number of MPs raised concerns. While this ad hoc
campaign took shape, Asda’s rival Tesco announced it was installing 100 new
collection points in its stores. Opposition to Asda’s decision was expressed by
the mayor of Liverpool, Labour’s Joe Anderson, in an open letter to Asda’s
chief executive Andy Clarke. Anderson said he and his extended family were all
regular shoppers at Asda stores, but the chain’s decision meant “we can no
longer consider being customers of yours, and I will publicly urge Liverpool
residents and others to do the same”. In response to Asda’s U-turn, Anderson
said: “It’s disappointing that we had to lobby a company like Asda, who are
usually good contributors to good causes. But all credit to them for listening.
I’m just glad that they’ve done the right thing and reversed the decision.” GUARDIAN